In re Kelley

• Citation: 297 F. 676
• Parties: In re KELLEY. Ex parte MARSHALL. Ex parte KELLEY.
• Decision Date: 29 October 1923
• Court: U.S. District Court — Southern District of New York

297 F. 676

In re KELLEY. Ex parte MARSHALL. Ex parte KELLEY.

United States District Court, S.D. New York.

October 29, 1923

W Davis Conrad, of New York City, for bankrupt.

Abel I Smith, of Hoboken, N.J., for trustee.

Otto S Bowling, of New York City, for Herbert.

LEARNED HAND, District Judge (after stating the facts as above).

First as to the bankrupt: The plaintiff's right is founded on contract, and, so far as any decree is asked against him personally, it is a dischargeable claim. His right to an injunction pro tanto is unquestionble, and he must have it. As he has by the adjudication lost any interest in the contract with the receivers or in the judgment, he is not a necessary party to the suit. However, if the trustee is a proper party, Kelley is also a proper party, merely as assignor in invitum of the trustee's interest. In that case, however, the decree must be limited to concluding him from disputing any declaration of the plaintiff's interest in the contract with the receivers or in the judgment. No decree of account or other personal judgment may go against him.

Next as to the trustee: The jurisdiction of this court to enjoin the suit so far as it seeks to adjudicate any rights of the trustee to the money already distributed is too well settled to need discussion. It is a part of the assets now in the custody of the bankruptcy court. The summary jurisdiction of this court over the contract with the receivers, so far as it has not yet been performed, is not so clear. While it is, of course, impossible to speak of possession of a chose in action, the trustee is as fully vested with Kelley's rights as is possible, and may be regarded as in possession so far as that idea is applicable at all. A Stock Exchange seat, which is at most a chose in action, is an illustration of this principle. O'Dell v. Boyden, 150 F. 731, 80 C.C.A. 397 (C.C.A. 6); In re Hoey Tilden & Co. Ex parte Kaufmann, 292 F. 269 (S.D.N.Y., filed Nov. 17, 1922). So, too, is a claim against the Treasury of the United States. Orinoco Iron Co. v. Metzel, 230 F. 40, 144 C.C.A. 338 (C.C.A. 6). On the other hand, in Copeland v. Martin, 182 F. 805, 105 C.C.A. 237 (C.C.A. 5), an assignee of a chose in action successfully resisted the summary jurisdiction of the bankruptcy court. That, however, being the case of an outright assignment, may be regarded as depending upon the fact that the bankrupt had parted with all interest in the res.

In the case at bar the plaintiff in the state suit does not join either the receivers of the Butterworth-Judson Corporation or the judgment debtor. That suit cannot, therefore, result in a decree for payment or a reduction to possession of the choses in action. It is a bare suit to impress upon the trustee's rights the lien asserted. In such a case whatever may be thought when the suit includes the obligor, the res in controversy is merely the trustee's right of...